WASHINGTON – United States (US) regulators filed insider trading charges against five people, including three former Netflix employees, yesterday, accusing them of illegally using confidential data on subscriber growth at the streaming television giant.
The Securities and Exchange Commission (SEC) said the group generated US$3 million (RM12 million) in total profits by trading on insider information from three ex-Netflix software engineers.
“We allege that a Netflix employee and his close associates engaged in a long-running, multimillion dollar scheme to profit from valuable, misappropriated company information,” said SEC San Francisco regional office director Erin Schneider.
SEC Market Abuse Unit chief Joseph Sansone said the group tried to evade detection by using encrypted messaging apps and paying cash kickbacks.
“This case reflects our continued use of sophisticated analytical tools to detect, unravel and halt pernicious insider trading schemes that involve multiple tippers, traders and market events.”
According to the SEC complaint, Jun “Jay” Sung-mo was at the centre of a long-running scheme to illegally trade on non-public information while employed at Netflix in 2016 and 2017.
Sung-mo revealed this information to his brother, Jun Joon-mo, and a friend, Chon Junwoo, who both used it to trade in advance of multiple Netflix earnings announcements.
After Sung-mo left Netflix in 2017, he obtained confidential Netflix subscriber growth information from another insider, Ayden Lee, according to SEC.
The commission alleged that Sung-mo’s former colleague Bae Jae-hyeon – another Netflix engineer – provided the insider subscriber growth information in advance of the company’s July 2019 earnings announcement.
It said the individuals have consented to a court settlement, which will bar them from further violation and impose undetermined civil penalty.
The US Attorney’s Office has also filed separate criminal charges against Sung-mo, Joon-mo, Chon and Lee, said officials. – AFP, August 19, 2021
